Letter: Federal minimum wage

By Mary Anna Newman, New Bern

Published: Wednesday, April 30, 2014 at 03:29 PM.

Gallup polling shows that 76 percent of Americans support a hike in the federal minimum wage. Most people who oppose the increase say it will destroy jobs and negatively impact our fragile economic recovery. But does the latest research indicate such dire consequences?

The effect of changes in the minimum wage generates more research by economists than any other topic. The advantages to the 3.6 million people who earn the minimum wage, and to the 16.5 million workers who earn less than Obama’s proposed $10.10/hour minimum, are obvious. In a region such as Eastern N.C. where a disproportionate number of residents earn very low wages, this issue is hugely relevant to the growth and economic development we so badly need.

Newer research (since 2000) shows many upsides to an increase for the business community as well as workers and families who remain in poverty although employed. Low income workers who receive a wage increase will spend their additional money on food, gas, housing, clothing and health care--drivers of the retail recovery. Businesses have several avenues to offset the cost of increased wages, including modest price increases, smaller wage increases for their higher-paid employees, savings from lower employee turnover and increased productivity.

One 2013 study by the Institute for Research on Labor and Employment found less employee turnover in states which had increased the minimum wage-workers were less likely to leave on their own, and managers were more likely to keep the workers they had on staff to keep down costs of recruiting and training new workers. Another study by the Center for Economic and Policy Research showed similar results. A group of more than 600 economists recently told the president and congressional leaders that an increase in the minimum wage would stimulate today’s weak economy. A 2006 management study shows that higher paid employees reduce “shrinkage” such as theft, fraud and errors, and increase levels of customer service.

The impact of very low wages on working families in Eastern N.C. has long term societal effects on children. When parents must work two or more jobs to make ends meet, they have no time to help with homework, attend school events, or provide supervision and support that enables children to thrive and succeed in school.

If the minimum wage increase helps families and businesses, then why is Congress spending so much time debating the issue? Companies like Gap, Costco (retailers who have already increased wages), and Walmart are calling on government to increase the minimum wage. The argument that a higher minimum wage would hurt business has been shown not accurate, and there is clear evidence that business and the economy will benefit.

Gallup polling shows that 76 percent of Americans support a hike in the federal minimum wage. Most people who oppose the increase say it will destroy jobs and negatively impact our fragile economic recovery. But does the latest research indicate such dire consequences?

The effect of changes in the minimum wage generates more research by economists than any other topic. The advantages to the 3.6 million people who earn the minimum wage, and to the 16.5 million workers who earn less than Obama’s proposed $10.10/hour minimum, are obvious. In a region such as Eastern N.C. where a disproportionate number of residents earn very low wages, this issue is hugely relevant to the growth and economic development we so badly need.

Newer research (since 2000) shows many upsides to an increase for the business community as well as workers and families who remain in poverty although employed. Low income workers who receive a wage increase will spend their additional money on food, gas, housing, clothing and health care--drivers of the retail recovery. Businesses have several avenues to offset the cost of increased wages, including modest price increases, smaller wage increases for their higher-paid employees, savings from lower employee turnover and increased productivity.

One 2013 study by the Institute for Research on Labor and Employment found less employee turnover in states which had increased the minimum wage-workers were less likely to leave on their own, and managers were more likely to keep the workers they had on staff to keep down costs of recruiting and training new workers. Another study by the Center for Economic and Policy Research showed similar results. A group of more than 600 economists recently told the president and congressional leaders that an increase in the minimum wage would stimulate today’s weak economy. A 2006 management study shows that higher paid employees reduce “shrinkage” such as theft, fraud and errors, and increase levels of customer service.

The impact of very low wages on working families in Eastern N.C. has long term societal effects on children. When parents must work two or more jobs to make ends meet, they have no time to help with homework, attend school events, or provide supervision and support that enables children to thrive and succeed in school.

If the minimum wage increase helps families and businesses, then why is Congress spending so much time debating the issue? Companies like Gap, Costco (retailers who have already increased wages), and Walmart are calling on government to increase the minimum wage. The argument that a higher minimum wage would hurt business has been shown not accurate, and there is clear evidence that business and the economy will benefit.